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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___
Commission File Number 001-13449

Quantum Corporation
(Exact name of registrant as specified in its charter)

Delaware |  | 94-2665054
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
10770 E. Briarwood Avenue |  |
Centennial | CO |  | 80112
(Address of Principal Executive Offices) |  | (Zip Code)

(408) |  | 944-4000
Registrant's telephone number, including area code

N/A
(Former name, former address and former fiscal year, if changed since last report) |

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol |  | Name of each exchange on which registered
Common Stock, $0.01 par value per share |  | QMCO |  | Nasdaq Global Market

Table of Contents

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | x | Yes | ¨ | No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | x | Yes | ¨ | No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | x | Smaller reporting company | x
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |  |
☐ |

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |  |  |  |
☐ | Yes | x | No

As of the close of business on November 11, 2025, there were 13,721,291 shares of Quantum Corporation’s common stock issued and outstanding.

Table of Contents
QUANTUM CORPORATION
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2025
Table of Contents

|  | Page
PART I
Item 1. | Financial Statements (unaudited): |
| Condensed Consolidated Balance Sheets | 1
| Condensed Consolidated Statements of Operations and Comprehensive Loss | 2
| Condensed Consolidated Statements of Cash Flows | 3
| Condensed Consolidated Statements of Changes in Stockholders’ Deficit | 4
| Index to Notes to Condensed Consolidated Financial Statements | 6
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34
Item 4. | Controls and Procedures | 34
PART II
Item 1. | Legal Proceedings | 36
Item 1A. | Risk Factors | 36
Item 5. | Other Information | 36
Item 6. | Exhibits | 37
Signatures | 38

Table of Contents
As used in this Quarterly Report on Form 10-Q, the terms "Quantum," the “Company,” "we," "us," and "our" refer to Quantum Corporation and its subsidiaries taken as a whole, unless otherwise noted or unless the context indicates otherwise.
Note Regarding Forward-Looking Statements
This report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including, but not limited to, statements regarding our future operating results and financial position; our business strategy, focus and plans; our market growth and trends; our products, services and expected benefits thereof; and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including: the competitive pressures that we face; risks associated with executing our strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of our products and the delivery of our services effectively; the protection of our intellectual property assets, including intellectual property licensed from third parties; risks associated with our international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs; our response to emerging technological trends; the execution and performance of contracts by us and our suppliers, customers, clients and partners; the hiring and retention of key employees; risks associated with business combination and investment transactions; the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of the transformation and restructuring plans; the outcome of any legal proceedings, claims and disputes; the ability to meet stock exchange continued listing standards; the possibility that Nasdaq may delist our securities; risks related to our restatement and revisions to financial statements; risks related to our ability to implement and maintain effective internal control over financial reporting in the future; risks related to changes in our management; and those risks described under Part II, Item 1A. Risk Factors. Moreover, we operate in a competitive and changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this report or to conform these statements to actual results or revised expectations.

Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts, unaudited)

| September 30, 2025 |  | March 31, 2025 |
Assets |  |  |  |
Current assets: |  |  |  |
Cash and cash equivalents | $ | 14,670 |  |  | $ | 16,464 |  |
Restricted cash | 659 |  |  | 139 |  |
Accounts receivable, net of allowance for credit losses of $151 and $99, respectively | 43,934 |  |  | 52,502 |  |
Inventories | 18,930 |  |  | 22,434 |  |
Prepaid expenses | 4,524 |  |  | 2,738 |  |
Other current assets | 7,416 |  |  | 8,529 |  |
Total current assets | 90,133 |  |  | 102,806 |  |
Property and equipment, net | 10,697 |  |  | 11,378 |  |
Goodwill | 12,969 |  |  | 12,969 |  |
Intangible assets, net | — |  |  | 281 |  |
Right-of-use assets | 7,983 |  |  | 8,580 |  |
Other long-term assets | 15,915 |  |  | 19,388 |  |
Total assets | $ | 137,697 |  |  | $ | 155,402 |  |
Liabilities and Stockholders’ Deficit |  |  |  |
Current liabilities: |  |  |  |
Accounts payable | $ | 24,193 |  |  | $ | 31,463 |  |
Accrued compensation | 8,822 |  |  | 9,214 |  |
Deferred revenue, current portion | 66,758 |  |  | 75,076 |  |
Accrued restructuring | 855 |  |  | 786 |  |
Term debt | 99,634 |  |  | 96,486 |  |
Revolving credit facility | — |  |  | 26,600 |  |
Warrant liabilities | 23,895 |  |  | — |  |
Other accrued liabilities | 17,588 |  |  | 17,982 |  |
Total current liabilities | 241,745 |  |  | 257,607 |  |
Deferred revenue, net of current portion | 35,144 |  |  | 38,847 |  |
Operating lease liabilities | 8,602 |  |  | 8,934 |  |
Other long-term liabilities | 12,705 |  |  | 14,380 |  |
Total liabilities | 298,196 |  |  | 319,768 |  |
Commitments and contingencies (Note 10) |  |  |  |
Stockholders' deficit |  |  |  |
Preferred stock, 20,000 shares authorized; no shares issued and outstanding | — |  |  | — |  |
Common stock, $0.01 par value; 225,000 shares authorized; 13,333 and 6,962 shares issued and outstanding | 133 |  |  | 70 |  |
Additional paid-in capital | 846,451 |  |  | 779,645 |  |
Accumulated deficit | (1,006,133) |  |  | (942,471) |  |
Accumulated other comprehensive loss | (950) |  |  | (1,610) |  |
Total stockholders’ deficit | (160,499) |  |  | (164,366) |  |
Total liabilities and stockholders’ deficit | $ | 137,697 |  |  | $ | 155,402 |  |

See accompanying Notes to Condensed Consolidated Financial Statements.
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts, unaudited)

| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Revenue: |  |  |  |  |  |  |
Product | $ | 35,368 |  |  | $ | 39,278 |  |  | $ | 72,905 |  |  | $ | 81,931 |
Service and subscription | 25,620 |  |  | 30,205 |  |  | 50,563 |  |  | 56,915 |
Royalty | 1,727 |  |  | 2,363 |  |  | 3,534 |  |  | 5,265 |
Total revenue | 62,715 |  |  | 71,846 |  |  | 127,002 |  |  | 144,111 |
Cost of revenue: |  |  |  |  |  |  |
Product | 28,748 |  |  | 29,774 |  |  | 59,493 |  |  | 62,330 |
Service and subscription | 10,415 |  |  | 11,427 |  |  | 21,243 |  |  | 24,080 |
Total cost of revenue | 39,163 |  |  | 41,201 |  |  | 80,736 |  |  | 86,410 |
Gross profit | 23,552 |  |  | 30,645 |  |  | 46,266 |  |  | 57,701 |
Operating expenses: |  |  |  |  |  |  |
Sales and marketing | 11,819 |  |  | 13,578 |  |  | 24,474 |  |  | 26,873 |
General and administrative | 11,006 |  |  | 13,977 |  |  | 24,576 |  |  | 35,042 |
Research and development | 5,692 |  |  | 8,264 |  |  | 12,353 |  |  | 16,572 |
Restructuring charges | 3,193 |  |  | 383 |  |  | 5,616 |  |  | 1,574 |
Total operating expenses | 31,710 |  |  | 36,202 |  |  | 67,019 |  |  | 80,061 |
Loss from operations | (8,158) |  |  | (5,557) |  |  | (20,753) |  |  | (22,360) |
Other income (expense), net | (185) |  |  | (1,334) |  |  | (616) |  |  | (1,375) |
Interest expense | (6,227) |  |  | (6,131) |  |  | (12,743) |  |  | (9,921) |
Change in fair value of warrant liabilities | 1,525 |  |  | 3,550 |  |  | 1,525 |  |  | 5,216 |
Loss on debt extinguishment | (33,254) |  |  | (2,308) |  |  | (30,695) |  |  | (3,003) |
Loss before income taxes | (46,299) |  |  | (11,780) |  |  | (63,282) |  |  | (31,443) |
Income tax provision | 157 |  |  | 370 |  |  | 380 |  |  | 605 |
Net loss | $ | (46,456) |  |  | $ | (12,150) |  |  | $ | (63,662) |  |  | $ | (32,048) |
Net loss per share - basic and diluted | $ | (3.49) |  |  | $ | (2.54) |  |  | $ | (5.65) |  |  | $ | (6.69) |
Weighted average shares - basic and diluted | 13,322 |  |  | 4,792 |  |  | 11,266 |  |  | 4,792 |
Net loss | $ | (46,456) |  |  | $ | (12,150) |  |  | $ | (63,662) |  |  | $ | (32,048) |
Foreign currency translation adjustments, net | (62) |  |  | 659 |  |  | 660 |  |  | 801 |
Total comprehensive loss | $ | (46,518) |  |  | $ | (11,491) |  |  | $ | (63,002) |  |  | $ | (31,247) |

See accompanying Notes to Condensed Consolidated Financial Statements.
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

| Six Months Ended September 30, |  |
| 2025 |  | 2024 |  |
Operating activities |  |  |  |  |
Net loss | $ | (63,662) |  |  | $ | (32,048) |  |  |
Adjustments to reconcile net loss to net cash used in operating activities |  |  |  |  |
Depreciation and amortization | 1,857 |  |  | 3,347 |  |  |
Amortization of debt issuance costs | 3,998 |  |  | 2,081 |  |  |
Non-cash lease expense | 697 |  |  | 934 |  |  |
Gain (loss) on debt extinguishment | 5,275 |  |  | 3,003 |  |  |
Provision for product and manufacturing inventories | 3,633 |  |  | 1,167 |  |  |
Stock-based compensation | (205) |  |  | 1,641 |  |  |
Paid-in-kind interest | 3,579 |  |  | 1,844 |  |  |
Warrants issued in connection with debt amendments | 25,420 |  |  | — |  |  |
Change in fair value of warrant liabilities | (1,525) |  |  | (5,216) |  |  |
Other non-cash | 1,936 |  |  | 851 |  |  |
Changes in assets and liabilities: |  |  |  |  |
Accounts receivable, net | 8,429 |  |  | 16,638 |  |  |
Inventories | (150) |  |  | (1,625) |  |  |
Prepaid expenses | (1,786) |  |  | (1,446) |  |  |
Operating lease liabilities | (587) |  |  | (500) |  |  |
Accounts payable | (7,794) |  |  | 5,253 |  |  |
Accrued compensation | (393) |  |  | (4,350) |  |  |
Accrued restructuring charges | 69 |  |  | — |  |  |
Deferred revenue | (12,021) |  |  | (12,452) |  |  |
Other current assets | 1,085 |  |  | (780) |  |  |
Other non-current assets | 1,077 |  |  | 1,280 |  |  |
Other current liabilities | (241) |  |  | 2,122 |  |  |
Other non-current liabilities | (1,180) |  |  | 1,062 |  |  |
Net cash used in operating activities | (32,489) |  |  | (17,194) |  |  |
Investing activities |  |  |  |  |
Purchases of property and equipment | (1,606) |  |  | (3,228) |  |  |
Net cash used in investing activities | (1,606) |  |  | (3,228) |  |  |
Financing activities |  |  |  |  |
Borrowings of long-term debt, net of debt issuance costs | (6,317) |  |  | 24,655 |  |  |
Repayments of long-term debt | (909) |  |  | (13,537) |  |  |
Borrowings of credit facility | 71,625 |  |  | 209,852 |  |  |
Repayments of credit facility | (98,682) |  |  | (209,445) |  |  |
Proceeds from shares issued related to the SEPA, net | 66,993 |  |  | — |  |  |
Proceeds from the issuance of common stock, net | 81 |  |  | — |  |  |
Net cash provided by financing activities | 32,791 |  |  | 11,525 |  |  |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 30 |  |  | (3) |  |  |
Net change in cash, cash equivalents and restricted cash | (1,274) |  |  | (8,900) |  |  |
Cash, cash equivalents and restricted cash at beginning of period | 16,603 |  |  | 25,860 |  |  |
Cash, cash equivalents and restricted cash at end of period | $ | 15,329 |  |  | $ | 16,960 |  |  |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows: |  |
Cash and cash equivalents | $ | 14,670 |  |  | $ | 16,719 |  |  |
Restricted cash | 659 |  |  | 241 |  |  |
Cash, cash equivalents and restricted cash at the end of period | $ | 15,329 |  |  | $ | 16,960 |  |  |
Supplemental disclosure of cash flow information |  |  |  |  |
Cash paid for interest | $ | 4,591 |  |  | $ | 5,539 |  |  |
Cash paid for income taxes, net | $ | 327 |  |  | $ | 1,304 |  |  |
Non-cash transactions |  |  |  |  |
Purchases of property and equipment included in accounts payable | $ | 117 |  |  | $ | 312 |  |  |
Right-of-use assets obtained in exchange for new lease liabilities | $ | 9 |  |  | $ | 472 |  |  |
Paid-in-kind interest | $ | 3,579 |  |  | $ | 1,844 |  |  |

See accompanying Notes to Condensed Consolidated Financial Statements.
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(in thousands, unaudited)

|  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' Deficit
Three Months Ended |  | Shares |  | Amount |  |  |  |
Balance, June 30, 2024 |  | 4,792 |  |  | $ | 48 |  |  | $ | 708,952 |  |  | $ | (847,278) |  |  | $ | (2,051) |  |  | $ | (140,329) |
Net loss |  | — |  |  | — |  |  | — |  |  | (12,150) |  |  | — |  |  | (12,150) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | 659 |  |  | 659 |
Stock-based compensation |  | — |  |  | — |  |  | 716 |  |  | — |  |  | — |  |  | 716 |
Balance, September 30, 2024 |  | 4,792 |  |  | $ | 48 |  |  | $ | 709,668 |  |  | $ | (859,428) |  |  | $ | (1,392) |  |  | $ | (151,104) |
Balance, June 30, 2025 |  | 13,319 |  |  | $ | 133 |  |  | $ | 846,046 |  |  | $ | (959,677) |  |  | $ | (888) |  |  | $ | (114,386) |
Net loss |  | — |  |  | — |  |  | — |  |  | (46,456) |  |  | — |  |  | (46,456) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | (62) |  |  | (62) |
Shares issued under employee incentive plans, net |  | 14 |  |  | — |  |  | 81 |  |  | — |  |  | — |  |  | 81 |
Stock-based compensation |  | — |  |  | — |  |  | 324 |  |  | — |  |  | — |  |  | 324 |
Balance, September 30, 2025 |  | 13,333 |  |  | $ | 133 |  |  | $ | 846,451 |  |  | $ | (1,006,133) |  |  | $ | (950) |  |  | $ | (160,499) |

See accompanying Notes to Condensed Consolidated Financial Statements.
QUANTUM CORPORATION
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QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(in thousands, unaudited)

|  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' Deficit
Six Months Ended |  | Shares |  | Amount |  |  |  |
Balance, March 31, 2024 |  | 4,792 |  |  | $ | 48 |  |  | $ | 708,027 |  |  | $ | (827,380) |  |  | $ | (2,193) |  |  | $ | (121,498) |
Net loss |  | — |  |  | — |  |  | — |  |  | (32,048) |  |  | — |  |  | (32,048) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | 801 |  |  | 801 |
Stock-based compensation |  | — |  |  | — |  |  | 1,641 |  |  | — |  |  | — |  |  | 1,641 |
Balance, September 30, 2024 |  | 4,792 |  |  | $ | 48 |  |  | $ | 709,668 |  |  | $ | (859,428) |  |  | $ | (1,392) |  |  | $ | (151,104) |
Balance, March 31, 2025 |  | 6,962 |  |  | $ | 70 |  |  | $ | 779,645 |  |  | $ | (942,471) |  |  | $ | (1,610) |  |  | $ | (164,366) |
Net loss |  | — |  |  | — |  |  | — |  |  | (63,662) |  |  | — |  |  | (63,662) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | 660 |  |  | 660 |
Shares issued under employee incentive plans |  | 51 |  |  | — |  |  | 81 |  |  | — |  |  | — |  |  | 81 |
Shares issued related to the SEPA, (net of $2,700 issuance costs) |  | 6,320 |  |  | 63 |  |  | 66,930 |  |  | — |  |  | — |  |  | 66,993 |
Stock-based compensation |  | — |  |  | — |  |  | (205) |  |  | — |  |  | — |  |  | (205) |
Balance, September 30, 2025 |  | 13,333 |  |  | $ | 133 |  |  | $ | 846,451 |  |  | $ | (1,006,133) |  |  | $ | (950) |  |  | $ | (160,499) |

See accompanying Notes to Condensed Consolidated Financial Statements.
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INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

|  | Page
Note 1: | Description of Business and Summary of Significant Accounting Policies | 7
Note 2: | Revenue | 9
Note 3: | Balance Sheet Information | 10
Note 4: | Debt | 11
Note 5: | Fair Value of Financial Instruments | 14
Note 6: | Leases | 15
Note 7: | Restructuring Charges | 16
Note 8: | Net Loss Per Share | 17
Note 9: | Income Taxes | 17
Note 10: | Commitments and Contingencies | 18
Note 11: | Segment Information | 19
Note 12: | Revision of Previously Issued Financial Statements | 21

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Quantum Corporation, together with its consolidated subsidiaries, stores and manages digital video and other forms of unstructured data, providing streaming performance for video and rich media applications, along with low-cost, long-term storage systems for data protection and archiving. The Company helps customers around the world capture, create and share digital data and preserve and protect it for decades. The Company’s software-defined, hyperconverged storage solutions span from non-volatile memory express, to solid state drives, hard disk drives, tape and the cloud and are tied together leveraging a single namespace view of the entire data environment. The Company works closely with a broad network of distributors, value-added resellers, direct marketing resellers, original equipment manufacturers and other suppliers to meet customers’ evolving needs.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”).
The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting only of normal and recurring items, necessary to present fairly our financial position as of September 30, 2025, the results of operations and comprehensive loss, statements of cash flows, and changes in stockholders’ deficit for the three and six months ended September 30, 2025 and 2024. Interim results are not necessarily indicative of full year performance because of short-term variations.
Going Concern
These condensed consolidated financial statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company’s ability to continue as a going concern exists.
The Company is required to repay the Term Loan (as defined herein) on August 5, 2026. At the present time, the Company does not have sufficient cash to be able to make this repayment nor does the Company expect to generate sufficient cash through operating activities to make this repayment by August 5, 2026. On September 23, 2025, the Company entered into a transaction agreement with Dialectic (as further discussed herein) which laid out the terms to exchange Dialectic’s portion of the Term Loan for one or more convertible notes with a three year maturity. The issuance of the convertible note(s) is subject to stockholder approval. In the same agreement, the Company also agreed to use the proceeds from the Standby Equity Purchase Agreement (“SEPA”) to repay OC III Lenders for its portion of the Term Loan. However, there is no assurance that the issuance of the Convertible Note will be approved nor that we will be able to raise sufficient cash proceeds from the SEPA to repay the Term Loan. See Note 4: Debt for further information on our credit agreements.
The condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. All credit facilities are collateralized by a pledge of the Company’s assets.
Revision of Previously Issued Financial Statements for Immaterial Misstatements
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In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the three and six months ended September 30, 2025, the Company identified that certain previously disclosed errors—which resulted in a restatement of the financial statements for the three and nine months ended December 31, 2024, as filed in the Annual Report also affected the financial statements for the three and six months ended September 30, 2024.
The impact of these errors on the three and six months ended September 30, 2024 was evaluated in accordance with SEC Staff Accounting Bulletins No. 99 and 108 and was determined to be immaterial to the previously issued financial statements. Accordingly, the Company has revised, rather than restated, the comparative financial information for September 30, 2024 presented in this Quarterly Report on Form 10-Q.
The nature of the revisions is as follows:
•Service contract term – The Company identified inconsistencies in the contract term used to recognize service and subscription revenue under ASC 606. Revenue is required to be deferred and recognized ratably over the contractual term of the arrangement. Management reviewed and updated the revenue recognition periods to ensure consistent application for all relevant contracts invoiced during the fiscal year ended March 31, 2025. These adjustments have been reflected in the revenue calculations presented herein. See Note 12: Revision of Previously Issued Financial Statements for more information.
•Application of ASC 606 related to standalone selling price (“SSP”) – The Company determined that the standalone selling prices used during the fiscal year ended March 31, 2025 had not been appropriately updated. Accordingly, prior to March 31, 2025, the Company refreshed the SSPs for all performance obligations in bundled contracts, maximizing the use of observable inputs. This adjustment resulted in changes to the allocation of transaction price and corresponding revenue recognition.
For further discussion of the restatement of the financial statements for the three and nine months ended December 31, 2024, refer to the Annual Report.
Reclassifications
Certain prior-period amounts in the condensed consolidated statements of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on total cash flows.
Reverse Stock Split
On August 15, 2024, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a ratio ranging from 1 share-for-5 shares up to a ratio of 1-for-20 shares, with the exact ratio, if any, to be selected by the board of directors (the “Board”). On August 15, 2024, the Board approved a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the Common Stock. The Reverse Stock Split became effective as of August 26, 2024 at 4:01 p.m., Eastern Time (the “Effective Time”). At the Effective Time, every twenty issued shares of Common Stock were automatically reclassified into one issued share of Common Stock, with any fractional shares resulting from the Reverse Stock Split rounded up to the nearest whole share. The number of outstanding shares of Common Stock was reduced from approximately 95.9 million shares to approximately 4.8 million shares.
All share and per share amounts for Common Stock in these condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations, inventory adjustments, useful lives of intangible assets and property and equipment, stock-based compensation, fair value of warrants, and provision for income taxes including related reserves. Management bases its estimates on historical experience and on various other assumptions which management believes to be
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reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Restricted Cash
Restricted cash is comprised of bank guarantees and similar required minimum balances that serve as cash collateral in connection with various items including insurance requirements, value added taxes, ongoing tax audits and leases in certain countries.
Accounting Pronouncement Recently Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which required greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 was adopted beginning April 1, 2025, with no material impact.
Recent Accounting Pronouncement Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosures of specific expense categories included within each expense caption presented on the Statements of Operations. The new standard can be applied on either a fully retrospective or prospective basis ASU 2024-03 will be effective for our fiscal year beginning April 1, 2027, and interim periods within our fiscal year beginning April 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its financial statement disclosures.
In July 2025, the FASB issued ASU 2025-05, "Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). The amendments in this update provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under FASB Accounting Standards Codification 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for the Company beginning in the fiscal year beginning April 1, 2026, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, “Targeted Improvements to the Accounting for Internal-Use Software” (Topic 350). ASU 2025-06 eliminates references to software development project stages and revises the criteria that must be met to begin capitalizing internal-use software costs. The standard permits entities to adopt the guidance using a prospective, retrospective, or modified transition approach and becomes effective for us beginning January 1, 2028, with early adoption permitted. The Company is currently assessing the potential impact that ASU 2025-06 will have on its financial statements disclosures.
NOTE 2: REVENUE
Contract Balances
The following table presents the Company’s receivables and contract liabilities and certain information related to this balance as of September 30, 2025, March 31, 2025 and March 31, 2024 (in thousands):

|  | September 30, 2025 |  | March 31, 2025 |  | March 31, 2024
Accounts receivable |  | $ | 43,934 |  |  | $ | 52,502 |  |  | $ | 67,788 |
Deferred revenue |  | $ | 101,902 |  |  | $ | 113,923 |  |  | $ | 116,687 |
Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period |  | $ | 48,123 |  |  | $ | 74,048 |  |  | $ | 76,304 |

Remaining Performance Obligations
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Total remaining performance obligations (“RPO”) representing contracted but not recognized revenue was $130.3 million as of September 30, 2025. RPO consists of both deferred revenue and uninvoiced, non-cancelable contracts that are expected to be invoiced and recognized as revenue in future periods and excludes variable consideration related to sales-based royalties.
RPO consisted of the following (in thousands):

|  | Current |  | Non-Current |  | Total
As of September 30, 2025 |  | $ | 92,504 |  |  | $ | 37,803 |  |  | $ | 130,307 |

NOTE 3: BALANCE SHEET INFORMATION
Certain significant amounts included in the Company's condensed consolidated balance sheets consist of the following (in thousands):
Manufacturing Inventories

| September 30, 2025 |  | March 31, 2025
Finished goods | $ | 6,987 |  |  | $ | 10,471 |
Work in progress | 1,517 |  |  | 380 |
Raw materials | 9,488 |  |  | 9,485 |
Total manufacturing inventories | $ | 17,992 |  |  | $ | 20,336 |

Service Parts Inventories

| September 30, 2025 |  | March 31, 2025
Finished goods | $ | 476 |  |  | $ | 1,189 |
Component parts | 462 |  |  | 909 |
Total service parts inventories | $ | 938 |  |  | $ | 2,098 |

Intangibles, net

|  | September 30, 2025 |  | March 31, 2025
|  | Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net
Customer lists |  | $ | 4,398 |  |  | $ | (4,398) |  |  | $ | — |  |  | $ | 4,398 |  |  | $ | (4,117) |  |  | $ | 281 |
Intangible assets, net |  | $ | 4,398 |  |  | $ | (4,398) |  |  | $ | — |  |  | $ | 4,398 |  |  | $ | (4,117) |  |  | $ | 281 |

Intangible assets amortization expense was $0.1 million and $0.5 million, and $0.3 million and $0.9 million for the three and six months ended September 30, 2025 and 2024, respectively. The Company recorded amortization of developed technology in cost of product revenue, and customer lists in sales and marketing expenses in the condensed consolidated statements of operations.
Goodwill
As of September 30, 2025 and March 31, 2025, goodwill was approximately $13.0 million. There were no impairments to goodwill as of September 30, 2025 and March 31, 2025.
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Other Long-Term Assets |
| September 30, 2025 |  | March 31, 2025 |  |
Capitalized SaaS implementation costs for internal use, net | $ | 12,972 |  |  | $ | 13,910 |  |  |
Capitalized debt costs | — |  |  | 2,871 |  |  |
Contract cost asset | 1,068 |  |  | 1,144 |  |  |
Other | 1,875 |  |  | 1,463 |  |  |
Total other long-term assets | $ | 15,915 |  |  | $ | 19,388 |  |  |

NOTE 4: DEBT
The Company’s debt consisted of the following (in thousands):

| September 30, 2025 |  | March 31, 2025
Term Loan | $ | 106,086 |  |  | $ | 102,507 |
PNC Credit Facility | — |  |  | 26,600 |
Less: current portion | (99,634) |  |  | (123,086) |
Less: unamortized debt issuance costs (1) | (6,452) |  |  | (6,021) |
Long-term debt, net | $ | — |  |  | $ | — |

(1) The unamortized debt issuance costs related to the Term Loan are presented as a reduction of the carrying amount of the corresponding debt balance on the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs related to the PNC Credit Facility are presented within other assets on the accompanying condensed consolidated balance sheets.
On August 5, 2021, the Company entered into a Term Loan Credit and Security Agreement (the “Term Loan Credit Agreement”), pursuant to which a senior secured term loan was issued (the “2021 Term Loan”), maturing on August 5, 2026. The Company also entered into an Amended and Restated Revolving Credit and Security Agreement on December 27, 2018 (the “PNC Credit Facility” and, together with the Term Loan Credit Agreement, the “Credit Agreements”), which, per its terms, was maturing on August 5, 2026 and provided for borrowings up to a maximum principal amount of the lesser of: (a) $40.0 million or (b) the amount of the borrowing base, as defined in the PNC Credit Facility agreement.
On June 1, 2023, the Company entered into amendments to the Credit Agreements (the “June 2023 Amendment”) which, among other things, provided an advance of $15.0 million in additional term loan borrowings (the “2023 Term Loan” and, together with the 2021 Term Loan, the "Term Loan") and incurred $0.9 million in original issuance discount and origination fees which have been recorded as a reduction to the carrying amount of the 2023 Term Loan and amortized to interest expense over the term of the loan. The terms of the 2023 Term Loan are substantially similar to the terms of the 2021 Term Loan, including in relation to maturity and security, except that, among other things, (a) the Applicable Margin (i) for any 2023 Term Loan designated an “ABR Loan” is 9.00% per annum and (ii) for any 2023 Term Loan designated as a “SOFR Loan” is 10.00% per annum, (b) accrued interest on the 2023 Term Loan is payable in kind ("PIK"), and is capitalized and added to the principal amount of the 2023 Term Loan at the end of each interest period applicable thereto, (c) the 2023 Term Loan does not amortize prior to the maturity date thereof, and (d) the 2023 Term Loan may not be prepaid prior to the payment in full of the existing term loans. In connection with the 2023 Term Loan, the Company issued warrants to purchase an aggregate of 0.06 million shares (the “June 2023 Warrants”) of the Common Stock, at an exercise price of $20.00 per share.
On July 11, 2024, the Company entered into amendments to the Credit Agreements (the “July 2024 Amendments”) which, among other things, delayed the testing of the Company’s June 30, 2024 net leverage ratio financial covenant until July 31, 2024. In connection with the amendments, the Company issued the Term Loan lenders warrants to purchase an aggregate of 50,000 shares of the Common Stock at a purchase price of $8.20 (the “July 2024 Warrants”).
The July 2024 Amendments to the 2021 Term Loan were accounted for as a modification. The fair value of the July 2024 Warrants of $0.4 million is reflected as a reduction to the carrying amount of the 2021 Term Loan and amortized to interest expense over the remaining term of the loan. The July 2024 Amendments to the PNC Credit
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Facility were accounted for as a modification and the $0.1 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.
On August 13, 2024, the Company entered into amendments to the Credit Agreements (the “August 2024 Amendments”) which, among other things, (i) waived compliance with the June 30, 2024 net leverage ratio financial covenant; (ii) waived any non-compliance with the minimum liquidity financial covenant through the date of the amendments; (iii) removed the fixed charges coverage ratio financial covenant until the fiscal quarter ended September 30, 2025; (iv) waived the testing requirement for the net leverage ratio financial covenant for the fiscal quarter ended September 30, 2024; (v) replaced the net leverage ratio financial covenant with a minimum EBITDA financial covenant for the fiscal quarters ended December 31, 2024 and March 31, 2025; (vi) reset the net leverage ratio financial covenant requirements for the fiscal quarters ended June 30, 2025 and September 30, 2025; (vii) reduced the minimum liquidity covenant to $10 million through September 30, 2025; (viii) adjusted the applicable interest rates on the Term Loan and PNC Credit Facility; (ix) removed required 2021 Term Loan principal amortization until the fiscal quarter ended September 30, 2025; and (x) repriced certain lender warrants.
In connection with the August 2024 Amendments, the Company received a new senior secured delayed draw term loan facility with a borrowing capacity of up to $26.3 million ($25.0 million after original issuance discount) and a commitment period expiring on October 31, 2024 (each draw, an “August 2024 Term Loan”). The Company borrowed $10.5 million at closing (“Initial August 2024 Term Loan”). Borrowings under the August 2024 Term Loan have an August 5, 2026 maturity date, which aligns with the 2021 Term Loan. The principal is payable quarterly beginning September 30, 2025, at a rate per annum equal to 5% of the original principal balance. The August 2024 Term Loan’s interest rate margin is (a) until March 31, 2025 (i) for any August 2024 Term Loan designated as a ‘SOFR Loan’, 12.00% per annum and (ii) for any August 2024 Term Loan designated an ‘ABR Loan’, 11.00% per annum, in each case, with 6.00% of such interest rate margin paid-in-kind, and (b) from April 1, 2025, (i) for any August 2024 Term Loan designated as a ‘SOFR Loan’, 14.00% per annum and (ii) for any August 2024 Term Loan designated an ‘ABR Loan’, 13.00% per annum, in each case, with 8.00% of such interest rate margin paid-in-kind. The August 2024 Term Loan also includes a multiple on invested capital payable to the August 2024 Term Loan lenders. Subsequently, the Company borrowed the remaining $15.8 million of the August 2024 Term Loan’s borrowing capacity before September 30, 2024.
Subsequent to the August 2024 Amendments, the 2021 Term Loan amortizes at 5.00% per annum commencing on September 30, 2025. Subsequent to the August 2024 Amendments and (A) until March 31, 2025, loans under the 2021 Term Loan designated as (x) ABR Loans bear interest at a rate per annum equal to the “ABR Rate” (calculated as the greatest of (i) 1.75%; (ii) the Federal funds rate plus 0.50%; (iii) a secured overnight financing rate based rate (the “SOFR Rate”) based upon an interest period of one month plus 1.0%; and (iv) the “Prime Rate” last quoted by the Wall Street Journal), plus an applicable margin of 8.75%, and (y) SOFR Rate Loans bear interest at a rate per annum equal to the SOFR Rate plus an applicable margin of 9.75%, in each case, with 3.75% of such interest rate margin paid-in-kind, with two specified step-downs in such applicable margin upon the receipt by the Company of cash proceeds from certain specified capital raises, and (B) from and after April 1, 2025, loans under the 2021 Term Loan designated as (x) ABR Loans bear interest at a rate per annum equal to the ABR Rate, plus an applicable margin of 8.75%, and (y) SOFR Rate Loans bear interest at a rate per annum equal to the SOFR Rate plus an applicable margin of 9.75%, in each case, with 3.75% of such applicable margin paid-in-kind, with a step-up of 1.00% per annum (which shall be paid-in-kind) if the Company’s total net leverage ratio is greater than 4.00x, and a step-down of 1.00% per annum if the Company’s total net leverage ratio is less than 3.50x (which shall reduce the paid-in-kind component of the applicable margin). The SOFR Rate is subject to a floor of 2.00%. The Company can designate a loan as an ABR Rate Loan or SOFR Rate Loan in its discretion.
Subsequent to the August 2024 Amendments, PNC Credit Facility loans designated as (x) PNC SOFR Loans bear interest at a rate per annum equal to a SOFR based rate, plus an applicable margin of 4.75% and (y) PNC Domestic Rate Loans and Swing Loans bear interest at a rate per annum equal to the greatest of (i) the base commercial lending rate of PNC Bank; (ii) the Overnight Bank Funding Rate plus 0.5%; and (iii) the daily SOFR rate plus 1.0%, plus an applicable margin of 3.75%. The Company can designate a loan as a PNC SOFR Loan or PNC Domestic Rate Loan in its discretion.
In connection with the August 2024 Amendments, the Company issued warrants to purchase an aggregate of 380,310 shares of the Common Stock, at an exercise price of $6.20 per share (the “August 2024 Warrants”) and which had a fair value of $2.0 million.
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The August 2024 Amendments to the 2021 Term Loan held by one lender was accounted for as a modification. The $1.2 million fair value of the August 2024 Warrants issued to this lender and the $0.5 million of PIK fees paid to this lender are reflected as a reduction to the carrying amount of their Term Loan and their initial delayed draw term loan and amortized to interest expense over the remaining term of the loan. The August 2024 Amendments to the 2021 Term Loan held by another lender was accounted for as a debt extinguishment. The Company recorded a loss on debt extinguishment of $3.0 million related to the write-off of a portion of unamortized debt issuance costs and fees and expenses incurred with the August 2024 Amendments.
On April 2, 2025, the Company consented to an assignment (the “Master Assignment Agreement”) of the 2021 Term Loan and 2024 Term Loans. One of the lenders sold and assigned all of its interests to Dialectic. The Master Assignment Agreement was accounted for as a debt extinguishment. The Company recorded a gain on debt extinguishment of $2.4 million related to the net of discount on issuance of term loans to a new lender and write-off of all unamortized debt issuance costs and fees related to the previous lender. The $0.4 million in new lender fees were recorded as a reduction to the carrying amounts of the term loans and amortized to interest expense over the remaining term of the loan.
On May 5, 2025, the Company entered into an amendment (the “May 2025 Term Loan Amendment”) to the Term Loan. The May 2025 Term Loan Amendment, among other things, revised the prepayment requirements under the Credit Agreement in connection with the net cash proceeds received from the SEPA. The May 2025 Term Loan Amendment was accounted for as a modification and the $0.1 million in lender amendment fees were recorded as a reduction to the carrying amounts of the term loans and amortized to interest expense over the remaining term of the loan.
On August 13, 2025, the Company terminated its PNC Credit Facility. As of the date of termination, there were no amounts outstanding under the facility. In connection with the termination, the Company paid an exit fee of $1.2 million, which was recorded within Loss on Debt Extinguishment on the condensed consolidated statement of operations and comprehensive loss.
On August 13, 2025, the Company obtained waivers to certain covenants including the net leverage covenant under the Term Loan Credit Agreement for the quarter ended June 30, 2025. Additionally, the requirement to use certain proceeds of the SEPA to pay down the Term Loan was waived.
On September 23, 2025, the Company entered into a Transaction Agreement (the “Transaction Agreement”) with the lenders under its Credit Agreement. Pursuant to this agreement, the Company agreed will issue to Dialectic Technology SPV LLC (“Dialectic”), on a dollar-for-dollar basis, one or more senior secured convertible notes (the “Convertible Note”) in exchange for the amounts then outstanding under the term loans held by Dialectic (the “Debt Exchange”). The closing of the Debt Exchange is subject to customary conditions, including approval by the Company’s stockholders. As of September 30, 2025, such approval has not been obtained, and the Debt Exchange had not occurred. As of September 30, 2025, total Term Loans outstanding to Dialectic was $52.6 million.
On September 23, 2025, the Company also entered into the Fifteenth Amendment to the Term Loan Credit Agreement (the “Fifteenth Amendment”). The Fifteenth Amendment, among other things, (i) permits the Company to retain up to $15.0 million of net cash proceeds from the SEPA received on or after the date of the Fifteenth Amendment for working capital and general corporate purposes, (ii) converts certain tranches of term loans held by the OC III Lenders into new and separate tranches, (iii) defers payment of cash interest on term loans held by Dialectic accruing during the quarters ending September 30, 2025 and December 31, 2025, until the earliest of (a) the date the Company elects to pay such deferred cash interest, (b) the maturity of such term loans, or (c) the date the Debt Exchange occurs, at which point such deferred interest will be subject to the terms of the Convertible Note indenture, and increases the interest rate applicable to such term loans by 2.00% during the period that such cash interest is being deferred, (iv) eliminates the existing maximum total net leverage ratio covenant and minimum daily liquidity covenant (noting that, following the Debt Exchange, the Convertible Notes will be subject to a minimum liquidity covenant), and (v) amends certain other provisions, including mandatory prepayment events, payment of fees and expenses, and reporting requirements.
In connection with the Fifteenth Amendment, the Company issued warrants to Dialectic to purchase up to 2,653,308 shares of Common Stock, representing 19.9% of the Company’s outstanding shares as of the Transaction Agreement date (the “Forbearance Warrant”) as consideration for the forbearance, waivers, and amendments granted under the Fifteenth Amendment.
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The Fifteenth Amendment to the Term Loans held by Dialectic was accounted for as an extinguishment under ASC 470-50, resulting in the recognition of a new debt instrument, the derecognition of the original term loans, and a loss on extinguishment of $33.3 and $30.7 million, which is included in loss on debt extinguishment for the three and six months ended September 30, 2025. The fair value of the Forbearance Warrant was treated as a lender fee and included in the extinguishment loss calculation. The Fifteenth Amendment to the Term Loans held by OC III Lenders was accounted for as a modification.
Related Party Transaction
The Term Loan and Forbearance Warrant with Dialectic constitute related party transactions, as John Fichthorn, a member of the Company's Board of Directors, is also Managing Partner of Dialectic Capital Management, the investment advisor to Dialectic. The principal on the Term Loan totaled $52.6 million as of September 30, 2025,and is payable at maturity. The Forbearance Warrant allows Dialectic to purchase up to 2,653,308 shares, with a fair value of $23.9 million as of that date.
Forbearance Warrant
The Forbearance Warrant, issued on September 23, 2025, has an exercise price of $8.81 per share, representing 80% of the seven-day volume-weighted average price as of September 22, 2025, and is exercisable until the seventh anniversary of its issuance. It includes a put right that allows the holder to require the Company to repurchase the unexercised portion for cash after the fifth anniversary, or earlier upon a change of control or liquidation. The repurchase price equals the holder’s pro rata share of the original issue value of $20 million, adjusted for any exercised portion.
The Forbearance Warrant is classified as a liability under ASC 480, as it may require cash settlement and meets the definition of a derivative. It is initially measured at fair value, with subsequent changes recognized in the condensed consolidated statement of operations under “Change in fair value of warrant liabilities.” See Note 5: Fair Value of Financial Instruments for more information.
Standby Equity Purchase Agreement
On January 25, 2025, the Company entered into the SEPA, in which pursuant to and subject to its terms, the Company has the right, but not the obligation, to sell up to $200 million of Common Stock at any time during the three-year period following the date of the SEPA.
As of September 30, 2025, the Company has issued approximately 7.5 million shares of Common Stock under the SEPA for net proceeds of approximately $82.8 million, of which 6.3 million shares of Common Stock for net proceeds of approximately $66.3 million were issued in the six months ended September 30, 2025. No shares were issued in the three months ended September 30, 2025.
NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s assets measured and recorded at fair value on a recurring basis may consist of money market funds, which are included in cash and cash equivalents in the condensed consolidated balance sheets. These instruments are valued using quoted market prices in active markets (Level 1 fair value measurements) at the respective balance sheet dates.
No impairment charges were recognized for non-financial assets for the three and six months ended September 30, 2025 and 2024. The Company has no non-financial liabilities measured and recorded at fair value on a non-recurring basis.
Long-Term Debt
The Company’s financial liabilities were comprised primarily of long-term debt as of September 30, 2025. The carrying amounts of the Company’s debt instruments are recorded at amortized cost. The fair value of the Company’s long-term debt is disclosed for informational purposes only and is not recognized in the condensed consolidated balance sheets.
The fair value of the Company’s debt was estimated using a discounted cash flow approach based on the Company’s current borrowing rates for similar types of debt instruments, adjusted for credit and nonperformance
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risk. The Company uses significant other observable market data and assumptions (Level 2 inputs, as defined in ASC 820, Fair Value Measurement) that it believes market participants would use in pricing such debt.
The carrying value and estimated fair value of the Company’s long-term debt were as follows (in thousands):

|  | September 30, 2025 |  | March 31, 2025
|  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Term Loans |  | $ | 106,086 |  |  | $ | 99,135 |  |  | $ | 102,507 |  |  | $ | 91,576 |
PNC Credit Facility |  | — |  |  | — |  |  | 26,600 |  |  | 24,755 |

Warrants
On September 23, 2025, the Company established the initial fair value for the Forbearance Warrant issued to Dialectic in connection with the Fifteenth Amendment. The fair value was subsequently remeasured as of September 30, 2025, and the resulting change in fair value was recognized in the condensed consolidated statement of operations under “Change in fair value of warrant liabilities.”
The Forbearance Warrant was valued using a Monte Carlo simulation model in conjunction with a Probability-Weighted Expected Return Model (“PWERM”). This model incorporates various assumptions, including the Company’s Common Stock price, expected volatility, risk-free interest rate, and the remaining contractual term of the warrant.
Because the valuation relies on significant unobservable inputs, the fair value of the Forbearance Warrant is classified as Level 3 within the fair value hierarchy.
The following table summarizes the key assumptions used in estimating the fair value of the Forbearance Warrant at issuance and at September 30, 2025:

| September 30, 2025 |  | September 23, 2025 |  |  |  |  |  |  |  |  |  |
Discount period (years) | 6.98 years |  | 7.0 years |  |  |  |  |  |  |  |  |  |
Risk-free interest rate | 3.57% - 3.89% |  | 3.52% - 3.83% |  |  |  |  |  |  |  |  |  |
Stock price volatility | 98.00% |  | 98.00% |  |  |  |  |  |  |  |  |  |
Stock price at valuation date | $9.92 |  | $10.69 |  |  |  |  |  |  |  |  |  |
Probability 1 | 35% - 15% - 50% |  | 35% - 15% - 50% |  |  |  |  |  |  |  |  |  |
Fair value (in thousands) | $23,895 |  | $25,420 |  |  |  |  |  |  |  |  |  |

(1) Scenario probability as of issuance was based on timing expectations of management that a liquidation event occurring was estimated at 35%; a fundamental transaction occurring was estimated at 15%; and none of the previous events was estimated at 50%.
The table below sets forth a summary of changes in the fair value of the Company’s warrant liabilities for the period ended September 30, 2025:

Balance at June 30, 2025 | $ | — |  |  |  |  |  |  |  |  |
Issuance of warrants | 25,420 |  |  |  |  |  |  |  |  |
Change in fair value of warrant liabilities | (1,525) |  |  |  |  |  |  |  |  |
Balance at September 30, 2025 | $ | 23,895 |  |  |  |  |  |  |  |  |

NOTE 6: LEASES
Supplemental balance sheet information related to leases is as follows (in thousands):
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Operating Leases |  | September 30, 2025 |  | March 31, 2025 |  |
Operating lease right-of-use asset |  | $ | 7,983 |  |  | $ | 8,580 |  |  |
Operating lease liability within other accrued liabilities |  | $ | 702 |  |  | $ | 856 |  |  |
Operating lease liability, net |  | 8,602 |  |  | 8,934 |  |  |
Total operating lease liabilities |  | $ | 9,304 |  |  | $ | 9,790 |  |  |

Components of lease cost were as follows (in thousands):

|  | Three Months Ended September 30, |  | Six Months Ended September 30,
Lease Cost |  | 2025 |  | 2024 |  | 2025 |  | 2024
Operating lease cost |  | $ | 472 |  |  | $ | 779 |  |  | $ | 1,141 |  |  | $ | 1,491 |
Variable lease cost |  | 36 |  |  | 82 |  |  | 75 |  |  | 152 |
Total lease cost |  | $ | 508 |  |  | $ | 861 |  |  | $ | 1,216 |  |  | $ | 1,643 |

Maturity of Lease Liabilities |  | Operating Leases
Remainder of fiscal year 2026 |  | $ | 1,099 |
2027 |  | 1,852 |
2028 |  | 1,625 |
2029 |  | 1,247 |
2030 |  | 1,244 |
Thereafter |  | 10,855 |
Total lease payments |  | 17,922 |
Less: imputed interest |  | (8,618) |
Present value of lease liabilities |  | $ | 9,304 |

Lease Term and Discount Rate |  | September 30, 2025 |  | March 31, 2025
Weighted average remaining operating lease term (years) |  | 10.21 |  | 10.19
Weighted average discount rate for operating leases |  | 12.6 | % |  | 12.59 | %

Operating cash outflows related to operating leases each totaled $1.1 million and $1.4 million for the six months ended September 30, 2025 and 2024, respectively.
NOTE 7: RESTRUCTURING CHARGES
During the quarters ended September 30, 2025 and 2024, the Company had certain approved restructuring plans to improve operational efficiencies and rationalize its cost structure. During the quarter ended September 30, 2025, the Company recognized $3.2 million of restructuring charges primarily related to employee severance and other termination benefits. These charges are presented within restructuring charges in the Condensed Consolidated Statements of Operations. The Company expects to recognize additional restructuring charges in future periods, primarily related to severance and termination benefits, and is expected to be substantially complete by the end of the fourth quarter of fiscal year 2026, which is subject to change.
The following tables present the activity and the estimated timing of future payouts for accrued restructuring included in other current liabilities in the condensed consolidated balance sheets (in thousands):
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|  | Severance and Benefits |  |  |  |
Balance as of March 31, 2024 |  | $ | — |  |  |  |  |
Restructuring charges |  | 1,571 |  |  |  |  |
Cash payments |  | (1,511) |  |  |  |  |
Other non-cash |  | (2) |  |  |  |  |
Balance as of September 30, 2024 |  | $ | 58 |  |  |  |  |
Balance as of March 31, 2025 |  | $ | 786 |  |  |  |  |
Restructuring charges |  | 5,616 |  |  |  |
Cash payments |  | (5,599) |  |  |  |  |
Other non-cash |  | 52 |  |  |  |  |
Balance as of September 30, 2025 |  | $ | 855 |  |  |  |  |

During the three and six months ended September 30, 2025, the Company recognized approximately $0.2 million and $0.3 million in forfeitures of unvested restricted stock units (“RSUs”) in connection with workforce reductions and employee departures.
NOTE 8: NET LOSS PER SHARE
The Company has performance share units, restricted stock units and options to purchase shares under its Employee Stock Purchase Plan, as amended and restated on July 25, 2023 (“ESPP”), granted under various stock incentive plans that, upon exercise and vesting, would increase shares outstanding. The Company has also issued a warrant to purchase shares of Common Stock.
The dilutive impact related to shares of Common Stock from incentive plans and the outstanding warrant is determined by applying the treasury stock method to the assumed vesting of outstanding performance share units and restricted stock units and the exercise of outstanding options and warrants. The dilutive impact related to shares of Common Stock from contingently issuable performance share units is determined by applying a two-step approach using both the contingently issuable share guidance and the treasury stock method. In periods of a net loss, all potentially dilutive weighted-average outstanding shares of Common Stock equivalents were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive.
The following weighted-average outstanding shares of Common Stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):

| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Stock Awards | 104 |  |  | 11 |  |  | 91 |  |  | 24 |

The Company had outstanding market based restricted stock units as of September 30, 2025 that were eligible to vest into shares of the Common Stock subject to the achievement of certain stock price targets in addition to a time-based vesting period. These contingently issuable shares are excluded from the computation of diluted earnings per share if, based on current period results, the shares would not be issuable if the end of the reporting period were the end of the contingency period. There were 34,201 shares of contingently issuable market-based restricted stock units that were excluded from the table above as the market conditions were not satisfied as of September 30, 2025.
NOTE 9: INCOME TAXES
The effective tax rate for the three months and six months ended September 30, 2025 and 2024 was (0.4)% and (0.6)%, as compared to (2.3)% and (1.6)% respectively. The effective tax rates differed from the federal statutory tax rate of 21% during each of these periods due primarily to unbenefited losses experienced in jurisdictions with
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valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions.
As of September 30, 2025, including interest and penalties, the Company had $83.6 million of unrecognized tax benefits, $74.4 million of which, if recognized, would favorably affect the effective tax rate without consideration of the valuation allowance. As of September 30, 2025, the Company had accrued interest and penalties related to these unrecognized tax benefits of $1.3 million. The Company recognizes interest and penalties related to income tax matters in the income tax provision in the condensed consolidated statements of operations. As of September 30, 2025, $76.0 million of unrecognized tax benefits were recorded as a contra deferred tax asset in other long-term assets in the condensed consolidated balance sheets and $7.6 million (including interest and penalties) were recorded in other long-term liabilities in the condensed consolidated balance sheets. During the next 12 months, it is reasonably possible that approximately $5.3 million of tax benefits, inclusive of interest and penalties, that are currently unrecognized could be recognized as a result of the expiration of applicable statutes of limitations. Upon recognition of the tax benefit related to the expiring statutes of limitation, $5.2 million will be offset by the establishment of a related valuation allowance. The net tax benefit recognized in the statements of operation is estimated to be $0.1 million.
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others being implemented through 2027. While there is no material impact to the Company's condensed consolidated financial statements for the quarter ended September 30, 2025, the Company is assessing its impact on the consolidated financial statements that would take effect beginning in the period in which the OBBBA was signed into law.
NOTE 10: COMMITMENTS AND CONTINGENCIES
Commitments to Purchase Inventory
The Company uses contract manufacturers for its manufacturing operations. Under these arrangements, the contract manufacturer procures inventory to manufacture products based upon the Company’s forecast of customer demand. The Company has similar arrangements with certain other suppliers. The Company is responsible for the financial impact on the supplier or contract manufacturer of any reduction or product mix shift in the forecast relative to materials that the third party had already purchased under a prior forecast. Such a variance in forecasted demand could require a cash payment for inventory in excess of current customer demand or for costs of excess or obsolete inventory. As of September 30, 2025, the Company had issued non-cancelable commitments for $45.0 million to purchase inventory from its contract manufacturers and suppliers.
Litigation
On September 4, 2025, a shareholder class action complaint was filed in the United States District Court for the District of Colorado. The complaint identifies Seung Lee as the plaintiff and names Quantum Corporation and James J. Lerner, Kenneth P. Gianella, and Laura Nash as defendants. It alleges certain violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 related to certain disclosures made in the Company’s quarterly and annual reports regarding its financial reporting for the third quarter of the Company’s fiscal year 2025 and its restatement of that financial reporting. The complaint seeks to designate the plaintiff as the lead plaintiff for the class and define a class period of November 15, 2024 through August 18, 2025, and seeks an award of unspecified damages, costs, and expenses. At this time, Quantum is not able to determine whether this lawsuit would have any material impact on our business, operating results, or financial condition.
On October 28, 2025, a shareholder derivative complaint was filed in the United States District Court for the District of Colorado. The complaint was filed by Brent Cullison derivatively on behalf of Quantum Corporation against James J. Lerner, Kenneth P. Gianella, Laura Nash, Don Jaworski, John Fichthorn, Hugues Meyrath, John R. Tracy, Emily White, James C. Clancy, and Tony J. Blevins. The complaint substantially repeats the allegations of the shareholder litigation described above and alleges related breaches of fiduciary duties and other causes of action. The complaint seeks recovery of damages sustained by Quantum arising from the allegations, as well as fees and costs incurred.
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Another shareholder derivative complaint was filed in the same court on November 4, 2025. That complaint names Felicia Marti on behalf of Quantum Corporation as the plaintiff, with James J. Lerner, Kenneth P. Gianella, Laura Nash, John Fichthorn, Donald J. Jaworski, Hugues Meyrath, John R. Tracy, and Emily White named as defendants. The complaint substantially repeats the allegations of the Cullison derivative litigation and seeks relief of recovery of damages sustained by Quantum arising from the allegations, certain corporate governance reforms, and fees and costs incurred.
At this time, Quantum is not able to determine whether the derivative lawsuits would have any material impact on our business, operating results, or financial condition.
Additionally, from time to time, the Company is party to various legal proceedings and claims arising from the normal course of business activities. Based on current available information, the Company does not expect that the ultimate outcome of any currently pending matters, individually or in the aggregate, will have a material adverse effect on the Company’s results of operations, cash flows or financial position.
NOTE 11: SEGMENT INFORMATION
Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages business activities as a single operating and reportable segment at the consolidated level. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating loss and net loss as reported on the condensed consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Condensed consolidated net loss is our segment’s primary measure of profit or loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.
Our CODM reviews the following significant segment expenses, which are each separately disclosed and presented in the condensed consolidated statements of operations: cost of revenue for product, cost of revenue for subscription services, research and development expenses, sales and marketing expenses, and general and administrative expenses. Other segment items within condensed consolidated net loss include restructuring and impairment expenses, other income (expense), net and income tax provision. Other significant noncash segment expenses include stock-based compensation, depreciation and amortization and fair value adjustments on warrant liabilities.
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Disaggregation of Revenue
The following table depicts the disaggregation of revenue by geographic areas and major product offerings and geographies and is consistent with how the CODM evaluates its financial performance (in thousands):

| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Americas 1 |  |  |  |  |  |  |  |  |  |  |
Product revenue | $ | 20,937 |  |  |  | $ | 21,845 |  |  |  | $ | 43,689 |  |  |  | $ | 46,424 |  |
Service and subscription | 14,988 |  |  |  | 16,680 |  |  |  | 29,347 |  |  |  | 31,389 |  |
Total revenue | 35,925 |  | 57 | % |  | 38,525 |  | 54 | % |  | 73,036 |  | 57 | % |  | 77,813 |  | 54 | %
EMEA |  |  |  |  |  |  |  |  |  |  |
Product revenue | 10,849 |  |  |  | 12,455 |  |  |  | 20,832 |  |  |  | 25,974 |  |
Service and subscription | 8,423 |  |  |  | 11,299 |  |  |  | 16,905 |  |  |  | 20,701 |  |
Total revenue | 19,272 |  | 31 | % |  | 23,754 |  | 33 | % |  | 37,737 |  | 30 | % |  | 46,675 |  | 32 | %
APAC |  |  |  |  |  |  |  |  |  |  |
Product revenue | 3,582 |  |  |  | 4,978 |  |  |  | 8,384 |  |  |  | 9,533 |  |
Service and subscription | 2,209 |  |  |  | 2,226 |  |  |  | 4,311 |  |  |  | 4,825 |  |
Total revenue | 5,791 |  | 9 | % |  | 7,204 |  | 10 | % |  | 12,695 |  | 10 | % |  | 14,358 |  | 10 | %
Consolidated |  |  |  |  |  |  |  |  |  |  |
Product revenue | 35,368 |  |  |  | 39,278 |  |  |  | 72,905 |  |  |  | 81,931 |  |
Service and subscription | 25,620 |  |  |  | 30,205 |  |  |  | 50,563 |  |  |  | 56,915 |  |
Royalty 2 | 1,727 |  | 3 | % |  | 2,363 |  | 3 | % |  | 3,534 |  | 3 | % |  | 5,265 |  | 4 | %
Total revenue | $ | 62,715 |  | 100 | % |  | $ | 71,846 |  | 100 | % |  | $ | 127,002 |  | 100 | % |  | $ | 144,111 |  | 100 | %

1 Revenue for the Americas geographic region outside of the United States is not significant.
2 Royalty revenue is not allocatable to geographic regions.
Revenue by Solution

| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2025 |  | % |  | 2024 |  | % |  | 2025 |  | % |  | 2024 |  | %
Primary storage systems | $ | 10,968 |  |  | 17 | % |  | $ | 12,204 |  |  | 17 | % |  | $ | 23,497 |  |  | 18 | % |  | $ | 29,798 |  |  | 21 | %
Secondary storage systems | 19,778 |  |  | 32 | % |  | 23,333 |  |  | 33 | % |  | 38,285 |  |  | 30 | % |  | 39,744 |  |  | 27 | %
Device and media | 7,550 |  |  | 12 | % |  | 7,827 |  |  | 11 | % |  | 17,492 |  |  | 14 | % |  | 17,428 |  |  | 12 | %
Service | 22,692 |  |  | 36 | % |  | 26,119 |  |  | 36 | % |  | 44,194 |  |  | 35 | % |  | 51,876 |  |  | 36 | %
Royalty | 1,727 |  |  | 3 | % |  | 2,363 |  |  | 3 | % |  | 3,534 |  |  | 3 | % |  | 5,265 |  |  | 4 | %
Total revenue 1 | $ | 62,715 |  |  | 100 | % |  | $ | 71,846 |  |  | 100 | % |  | $ | 127,002 |  |  | 100 | % |  | $ | 144,111 |  |  | 100 | %

1 Subscription revenue of $6.4 million and $5.0 million was allocated to primary and secondary storage systems for the three months ended September 30, 2025 and 2024, respectively. Subscription revenue of $2.9 million and $4.1 million was allocated to primary and secondary storage systems for the six months ended September 30, 2025 and 2024, respectively.
Net Loss
The following table shows reported segment revenue, segment profit or loss, and significant segment expenses were as follows: (in thousands):
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| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Total revenue | $ | 62,715 |  |  | $ | 71,846 |  |  | $ | 127,002 |  |  | $ | 144,111 |
Total cost of revenue | 39,163 |  |  | 41,201 |  |  | 80,736 |  |  | 86,410 |
Gross profit | 23,552 |  |  | 30,645 |  |  | 46,266 |  |  | 57,701 |
Gross margin | 37.6 | % |  | 42.7 | % |  | 36.4 | % |  | 40.0 | %
Operating expenses |  |  |  |  |  |  |
Salaries & fringe 1 | 16,731 |  |  | 21,244 |  |  | 34,733 |  |  | 42,667 |
Outside services 2 | 4,763 |  |  | 7,690 |  |  | 12,439 |  |  | 20,884 |
Infrastructure 3 | 2,330 |  |  | 2,882 |  |  | 4,852 |  |  | 5,790 |
Operational costs 4 | 2,060 |  |  | 2,440 |  |  | 4,392 |  |  | 4,796 |
Restructuring | 3,193 |  |  | 383 |  |  | 5,616 |  |  | 1,574 |
Other 5 | 2,633 |  |  | 1,563 |  |  | 4,987 |  |  | 4,350 |
Total operating expenses | 31,710 |  |  | 36,202 |  |  | 67,019 |  |  | 80,061 |
Loss from operations | (8,158) |  |  | (5,557) |  |  | (20,753) |  |  | (22,360) |
Other income (expense), net | (185) |  |  | (1,334) |  |  | (616) |  |  | (1,375) |
Interest expense | (6,227) |  |  | (6,131) |  |  | (12,743) |  |  | (9,921) |
Change in fair value of warrant liabilities | 1,525 |  |  | 3,550 |  |  | 1,525 |  |  | 5,216 |
Loss on debt extinguishment | (33,254) |  |  | (2,308) |  |  | (30,695) |  |  | (3,003) |
Loss before income taxes | (46,299) |  |  | (11,780) |  |  | (63,282) |  |  | (31,443) |
Income tax provision | 157 |  |  | 370 |  |  | 380 |  |  | 605 |
Net loss | $ | (46,456) |  |  | $ | (12,150) |  |  | $ | (63,662) |  |  | $ | (32,048) |

1 Salaries & fringe includes spend on contractors.
2 Outside services includes contractor, recruiting and legal expenses.
3 Infrastructure includes property related expenses, including fixed and variable lease expense, telecommunications and depreciation.
4 Operational costs include dues and subscriptions, computer expenses, office supplies and other miscellaneous items.
5 Other segment items includes travel related spend, marketing expense, taxes, fees and other miscellaneous items.
NOTE 12: REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements for the three and six months ended September 30, 2024 have been revised.
The nature of the revisions is as follows:
a.Service contract term - The Company identified that there were inconsistencies in the period used to recognize service and subscription revenue, which is deferred under Topic 606 and recognized ratably over the contractual term of the contract. The Company’s management reviewed and updated the periods over which revenue was being recognized to ensure consistent application for all service contracts invoiced in the fiscal year ended March 31, 2025, and the results have been applied to revenue.
b.Application of Topic 606 related to standalone selling price - The Company also determined that the standalone selling price that was being used for the fiscal year ended March 31, 2025 needed to be updated resulting in an adjustment to revenue. Standalone selling price has now been refreshed for all goods and services sold in a bundled contract under Topic 606, maximizing the use of observable inputs.
The following tables present the impact of the revisions to the unaudited condensed consolidated financial statements as of and for the three and six months ended September 30, 2024 (in thousands, unaudited):
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CONDENSED CONSOLIDATED BALANCE SHEET

| September 30, 2024 |
| As previously reported |  | Revisions |  | Reference |  | As revised |
Liabilities and Stockholders’ Deficit |  |  |  |  |  |  |  |
Deferred revenue, current portion | $ | 69,369 |  |  | $ | (3,868) |  |  | a, b |  | $ | 65,501 |  |
Total current liabilities | 134,601 |  |  | (3,868) |  |  |  |  | 130,733 |  |
Deferred revenue, net of current portion | 37,164 |  |  | 1,569 |  |  | a, b |  | 38,733 |  |
Total liabilities | 316,549 |  |  | (2,299) |  |  |  |  | 314,250 |  |
Stockholders' deficit |  |  |  |  |  |  |  |
Accumulated deficit | (861,727) |  |  | 2,299 |  |  | a, b |  | (859,428) |  |
Total stockholders’ deficit | (153,403) |  |  | 2,299 |  |  |  |  | (151,104) |  |
Total liabilities and stockholders’ deficit | $ | 163,146 |  |  | $ | — |  |  |  |  | $ | 163,146 |  |

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

| Three Months Ended September 30, 2024 |  | Six Months Ended September 30, 2024
| As previously reported |  | Revisions |  | Reference |  | As revised |  | As previously reported |  | Revisions |  | Reference |  | As revised
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product | $ | 36,785 |  |  | $ | 2,493 |  |  | b |  | $ | 39,278 |  |  | $ | 77,779 |  |  | $ | 4,152 |  |  | b |  | $ | 81,931 |
Service and subscription | 31,321 |  |  | (1,116) |  |  | a, b |  | 30,205 |  |  | 58,768 |  |  | (1,853) |  |  | a, b |  | 56,915 |
Gross profit | 29,268 |  |  | 1,377 |  |  |  |  | 30,645 |  |  | 55,402 |  |  | 2,299 |  |  |  |  | 57,701 |
Gain (loss) from operations | (6,934) |  |  | 1,377 |  |  |  |  | (5,557) |  |  | (24,659) |  |  | 2,299 |  |  |  |  | (22,360) |
Net gain (loss) before income taxes | (13,157) |  |  | 1,377 |  |  |  |  | (11,780) |  |  | (33,742) |  |  | 2,299 |  |  |  |  | (31,443) |
Net loss | $ | (13,527) |  |  | $ | 1,377 |  |  |  |  | $ | (12,150) |  |  | $ | (34,347) |  |  | $ | 2,299 |  |  |  |  | $ | (32,048) |

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

| Six Months Ended September 30, 2024 |  |  |  |  |  |  |  |
| As previously reported |  | Revisions |  | Reference |  | As revised |  |  |  |  |  |  |  |
Operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss | $ | (34,347) |  |  | $ | 2,299 |  |  | a, b |  | $ | (32,048) |  |  |  |  |  |  |  |  |
Adjustments to reconcile net loss to net cash used in operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred revenue | (10,153) |  |  | (2,299) |  |  | a, b |  | (12,452) |  |  |  |  |  |  |  |  |
Net cash used in operating activities | $ | (17,194) |  |  | $ | — |  |  |  |  | $ | (17,194) |  |  |  |  |  |  |  |  |

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

|  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' Deficit
Three Months Ended |  | Shares |  | Amount |  |  |  |
Balance, June 30, 2024, as revised |  | 4,792 |  |  | $ | 48 |  |  | $ | 708,952 |  |  | $ | (847,278) |  |  | $ | (2,051) |  |  | $ | (140,329) |
Net loss |  | — |  |  | — |  |  | — |  |  | (12,150) |  |  | — |  |  | (12,150) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | 659 |  |  | 659 |
Stock-based compensation |  | — |  |  | — |  |  | 716 |  |  | — |  |  | — |  |  | 716 |
Balance, September 30, 2024, as revised |  | 4,792 |  |  | $ | 48 |  |  | $ | 709,668 |  |  | $ | (859,428) |  |  | $ | (1,392) |  |  | $ | (151,104) |

|  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' Deficit
Six Months Ended |  | Shares |  | Amount |  |  |  |
Balance, March 31, 2024 |  | 4,792 |  |  | $ | 48 |  |  | $ | 708,027 |  |  | $ | (827,380) |  |  | $ | (2,193) |  |  | $ | (121,498) |
Net loss |  | — |  |  | — |  |  | — |  |  | (32,048) |  |  | — |  |  | (32,048) |
Foreign currency translation adjustments, net |  | — |  |  | — |  |  | — |  |  | — |  |  | 801 |  |  | 801 |
Stock-based compensation |  | — |  |  | — |  |  | 1,641 |  |  | — |  |  | — |  |  | 1,641 |
Balance, September 30, 2024, as revised |  | 4,792 |  |  | $ | 48 |  |  | $ | 709,668 |  |  | $ | (859,428) |  |  | $ | (1,392) |  |  | $ | (151,104) |

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NOTE 13: SUBSEQUENT EVENTS
During the period from October 1, 2025 through November 10, 2025, the Company issued approximately 0.3 million shares of Common Stock under the SEPA for net proceeds of approximately $2.8 million.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis compares the change in the consolidated financial statements for quarters and six months ended September 30, 2025 and September 30, 2024, and should be read together with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”). In particular, the risk factors contained in Part I, Item 1A of the Annual Report under the heading “Risk Factors” may reflect trends, demands, commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources. For comparisons of quarters and six months ended September 30, 2024 and September 30, 2023, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 14, 2024, and incorporated herein by reference. Our fiscal year ends on March 31 of each calendar year. "Fiscal 2025" refers to the fiscal year ended March 31, 2025.
The following discussion contains forward-looking statements, such as statements regarding anticipated impacts on our business, our future operating results and financial position, our business strategy and plans, our market growth and trends, and our objectives for future operations. Please see "Note Regarding Forward-Looking Statements" for more information about relying on these forward-looking statements.
OVERVIEW
We are a technology company whose mission is to deliver innovative solutions to organizations across the world. We design, manufacture and sell technology and services that help customers capture, create and share digital content, and protect it for decades. We emphasize innovative technology in the design and manufacture of our products to help our customers unlock the value in their video and unstructured data in new ways to solve their most pressing business challenges.
We generate revenue by designing, manufacturing, and selling technology and services. Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; data center costs in support of our cloud-based services; and interest associated with our long-term debt and income taxes.
Macroeconomic Conditions
We continue to actively monitor, evaluate and respond to the current uncertain macro environment, including the impact of changing interest rates, inflation, tariffs, lingering supply chain challenges, and fluctuation in the U.S. dollar. During the quarter we continued to experience longer sales cycle for opportunities with our enterprise as well as commercial customers.
The macro environment remains unpredictable and our past results may not be indicative of future performance.
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RESULTS OF OPERATIONS

| Three Months Ended September 30, |  | Six Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Total revenue | $ | 62,715 |  |  | $ | 71,846 |  |  | $ | 127,002 |  |  | $ | 144,111 |
Total cost of revenue (1) | 39,163 |  |  | 41,201 |  |  | 80,736 |  |  | 86,410 |
Gross profit | 23,552 |  |  | 30,645 |  |  | 46,266 |  |  | 57,701 |
Operating expenses |  |  |  |  |  |  |
Sales and marketing (1) | 11,819 |  |  | 13,578 |  |  | 24,474 |  |  | 26,873 |
General and administrative (1) | 11,006 |  |  | 13,977 |  |  | 24,576 |  |  | 35,042 |
Research and development (1) | 5,692 |  |  | 8,264 |  |  | 12,353 |  |  | 16,572 |
Restructuring charges (1) | 3,193 |  |  | 383 |  |  | 5,616 |  |  | 1,574 |
Total operating expenses | 31,710 |  |  | 36,202 |  |  | 67,019 |  |  | 80,061 |
Loss from operations | (8,158) |  |  | (5,557) |  |  | (20,753) |  |  | (22,360) |
Other income (expense), net | (185) |  |  | (1,334) |  |  | (616) |  |  | (1,375) |
Interest expense | (6,227) |  |  | (6,131) |  |  | (12,743) |  |  | (9,921) |
Change in fair value of warrant liabilities | 1,525 |  |  | 3,550 |  |  | 1,525 |  |  | 5,216 |
Loss on debt extinguishment | (33,254) |  |  | (2,308) |  |  | (30,695) |  |  | (3,003) |
Loss before income taxes | (46,299) |  |  | (11,780) |  |  | (63,282) |  |  | (31,443) |
Income tax provision | 157 |  |  | 370 |  |  | 380 |  |  | 605 |
Net loss | $ | (46,456) |  |  | $ | (12,150) |  |  | $ | (63,662) |  |  | $ | (32,048) |

(1) Includes stock-based compensation as follows:

| Three Months Ended September 30, |  | Six Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Cost of revenue | $ | 41 |  |  | $ | 76 |  |  | $ | (567) |  |  | $ | 266 |
Research and development | 19 |  |  | 161 |  |  | 87 |  |  | 349 |
Sales and marketing | (82) |  |  | 85 |  |  | (6) |  |  | 173 |
General and administrative | 346 |  |  | 394 |  |  | 281 |  |  | 853 |
Total | $ | 324 |  |  | $ | 716 |  |  | $ | (205) |  |  | $ | 1,641 |

Comparison of the Three Months Ended September 30, 2025 and 2024
Revenue

| Three Months Ended September 30, |  |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change |
Product revenue | $ | 35,368 |  |  | 56 | % |  | $ | 39,278 |  |  | 55 | % |  | $ | (3,910) |  |  | (10) | % |
Service and subscription | 25,620 |  |  | 41 | % |  | 30,205 |  |  | 42 | % |  | (4,585) |  |  | (15) | % |
Royalty | 1,727 |  |  | 3 | % |  | 2,363 |  |  | 3 | % |  | (636) |  |  | (27) | % |
Total revenue | $ | 62,715 |  |  | 100 | % |  | $ | 71,846 |  |  | 100 | % |  | $ | (9,131) |  |  | (13) | % |

Product Revenue
In the three months ended September 30, 2025, product revenue decreased $3.9 million, or 10%, as compared to the same period in fiscal 2025. The primary driver of the decrease was due to large orders in the prior period across secondary and primary storage.
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Service and Subscription Revenue
Service and subscription revenue decreased $4.6 million, or 15%, in the three months ended September 30, 2025 compared to the same period in fiscal 2025. This decrease was due to certain long-lived products reaching their end-of-service-life.
Royalty Revenue
We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium. Royalty revenue decreased $0.6 million, or 27%, in the three months ended September 30, 2025 compared to the same period in fiscal 2025 due to both lower market volume and a mix weighted towards linear-tape-open (“LTO”) types with lower royalty rates.
Gross Profit and Margin

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | Gross margin % |  | 2024 |  | Gross margin % |  | $ Change |  | Basis point change
Product | $ | 6,620 |  |  | 18.7 | % |  | $ | 9,504 |  |  | 24.2 | % |  | $ | (2,884) |  |  | (550) |
Service and subscription | 15,205 |  |  | 59.3 | % |  | 18,778 |  |  | 62.2 | % |  | (3,573) |  |  | (290) |
Royalty | 1,727 |  |  | 100.0 | % |  | 2,363 |  |  | 100.0 | % |  | (636) |  |  | — |
Gross profit | $ | 23,552 |  |  | 37.6 | % |  | $ | 30,645 |  |  | 42.7 | % |  | $ | (7,093) |  |  | (510) |

Gross profit and margin percentages are key metrics that management monitors to assess the performance on the business.
Product Gross Margin
Product gross margin decreased by $2.9 million, or by 550 basis points, for the three months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily due to an inventory provision accrued for certain end-of-life products, as well as an overall mix weighted towards lower margin products.
Service and Subscription Gross Margin
Service and subscription gross margins decreased 290 basis points for the three months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily driven by reduced revenue as many long-lived products reach their end-of-service life. To mitigate these declines, costs of service has been reduced across the organization, including logistics, repair, and labor.
Royalty Gross Margin
Royalties do not have significant related cost of sales.
Operating Expenses

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Sales and marketing | $ | 11,819 |  |  | 19 | % |  | $ | 13,578 |  |  | 19 | % |  | $ | (1,759) |  |  | (13) | %
General and administrative | 11,006 |  |  | 18 | % |  | 13,977 |  |  | 19 | % |  | (2,971) |  |  | (21) | %
Research and development | 5,692 |  |  | 9 | % |  | 8,264 |  |  | 12 | % |  | (2,572) |  |  | (31) | %
Restructuring charges | 3,193 |  |  | 5 | % |  | 383 |  |  | 1 | % |  | 2,810 |  |  | 734 | %
Total operating expenses | $ | 31,710 |  |  | 51 | % |  | $ | 36,202 |  |  | 50 | % |  | $ | (4,492) |  |  | (12) | %

In the three months ended September 30, 2025, sales and marketing expenses decreased $1.8 million, or 13%, as compared with the same period in fiscal 2025. This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.
In the three months ended September 30, 2025, general and administrative expenses decreased $3.0 million, or 21%, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.
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In the three months ended September 30, 2025, research and development expenses decreased $2.6 million, or 31%, as compared with the same period in fiscal 2025. This decrease was the result of efficiencies realized through improved organization design, including the consolidation of common functions and increased weighting of resources in lower-cost regions.
In the three months ended September 30, 2025, restructuring expenses increased $2.8 million, or 734% as compared with the same period in fiscal 2025. This increase in restructuring expenses primarily involves workforce reductions and related severance and termination benefits.These actions are part of management’s ongoing efforts to align the Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units.
The Company expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of the fourth quarter of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.
Other Income (Expense), net

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Other income (expense),net | $ | (185) |  |  | 0 | % |  | $ | (1,334) |  |  | (2) | % |  | $ | 1,149 |  |  | 86 | %

The change in other income (expense), net during the three months ended September 30, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the three months ended September 30, 2025.
Interest Expense

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Interest expense | $ | (6,227) |  |  | (10) | % |  | $ | (6,131) |  |  | (9) | % |  | $ | (96) |  |  | 2 | %

In the three months ended September 30, 2025, interest expense increased $0.1 million, or 2%, as compared with the same period in fiscal 2025 due to a higher effective interest rate on our Term Loan.
Warrant Liabilities

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Change in fair value of warrant liabilities | $ | 1,525 |  |  | 2 | % |  | $ | 3,550 |  |  | 6 | % |  | $ | (2,025) |  |  | (57) | %

In the three months ended September 30, 2025, we recorded a non-cash gain of $1.5 million related to the change in fair value of our Forbearance Warrant liabilities. In the three months ended September 30, 2024, we recorded a non-cash gain of $3.6 million.
Loss on Debt Extinguishment

| Three Months Ended June 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Loss on debt extinguishment | $ | (33,254) |  |  | (48) | % |  | $ | (2,308) |  |  | (3) | % |  | $ | (30,946) |  |  | 1,341 | %

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In September 30, 2025, loss on debt extinguishment was related to the net of discount on issuance of term loans to a new lender and write-off of all unamortized debt issuance costs and fees. In September 30, 2024, loss on debt extinguishment was related to prepayment of our long-term debt.
Income Taxes

| Three Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of pretax income |  | 2024 |  | % of pretax income |  | $ Change |  | % Change
Income tax provision | $ | 157 |  |  | — | % |  | $ | 370 |  |  | (3) | % |  | $ | (213) |  |  | (58) | %

The income tax provision for the three months ended September 30, 2025 and 2024 is primarily influenced by foreign and state income taxes. Due to our history of net losses in the United States, the protracted period for utilizing tax attributes in certain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets. Accordingly, we have established a full valuation allowance against our U.S. and certain foreign net deferred tax assets. Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes various tax law changes effective beginning in 2025; while the Act had no material impact on the Company’s third-quarter 2025 results, the Company is evaluating its future effects.
Comparison of the Six Months Ended September 30, 2025 and 2024
Revenue

| Six Months Ended September 30, |  |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change |
Product revenue | $ | 72,905 |  |  | 57 | % |  | $ | 81,931 |  |  | 57 | % |  | $ | (9,026) |  |  | (11) | % |
Service and subscription | 50,563 |  |  | 40 | % |  | 56,915 |  |  | 39 | % |  | (6,352) |  |  | (11) | % |
Royalty | 3,534 |  |  | 3 | % |  | 5,265 |  |  | 4 | % |  | (1,731) |  |  | (33) | % |
Total revenue | $ | 127,002 |  |  | 100 | % |  | $ | 144,111 |  |  | 100 | % |  | $ | (17,109) |  |  | (12) | % |

Product Revenue
In the six months ended September 30, 2025, product revenue decreased $$9.0 million, or 11%, as compared to the same period in fiscal 2025. The primary driver of the decrease was in Primary storage systems with a large video surveillance order in the prior period.
Service and Subscription Revenue
Service and subscription revenue decreased $6.4 million, or 11%, in the six months ended September 30, 2025 compared to the same period in fiscal 2025. This decrease was due to certain long-lived products reaching their end-of-service-life.
Royalty Revenue
We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium. Royalty revenue saw a decrease of $1.7 million, or 33%, in the six months ended September 30, 2025 compared to the same period in fiscal 2025 due to both lower market volume and a mix weighted towards LTO types with lower royalty rates.
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Gross Profit and Margin

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | Gross margin % |  | 2024 |  | Gross margin % |  | $ Change |  | Basis point change
Product | $ | 13,412 |  |  | 18.7 | % |  | $ | 19,601 |  |  | 24.2 | % |  | $ | (6,189) |  |  | (550) |
Service and subscription | 29,320 |  |  | 59.3 | % |  | 32,835 |  |  | 62.2 | % |  | (3,515) |  |  | (290) |
Royalty | 3,534 |  |  | 100.0 | % |  | 5,265 |  |  | 100.0 | % |  | (1,731) |  |  | — |
Gross profit | $ | 46,266 |  |  | 37.6 | % |  | $ | 57,701 |  |  | 42.7 | % |  | $ | (11,435) |  |  | (510) |

Gross profit and margin percentages are key metrics that management monitors to assess the performance on the business.
Product Gross Margin
Product gross margin decreased by $6.2 million, or by 550 basis points, for the six months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily due to an inventory provision accrued for certain end-of-life products, as well as supply chain logistics costs including import tariffs.
Service and Subscription Gross Margin
Service and subscription gross margins decreased (290) basis points for the six months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily driven by reduced revenue as many long-lived products reach their end-of-service life. To mitigate these declines, costs of service has been reduced across the organization, including logistics, repair, and labor.
Royalty Gross Margin
Royalties do not have significant related cost of sales.
Operating Expenses

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Sales and marketing | $ | 24,474 |  |  | 39 | % |  | $ | 26,873 |  |  | 37 | % |  | $ | (2,399) |  |  | (9) | %
General and administrative | 24,576 |  |  | 39 | % |  | 35,042 |  |  | 49 | % |  | (10,466) |  |  | (30) | %
Research and development | 12,353 |  |  | 20 | % |  | 16,572 |  |  | 23 | % |  | (4,219) |  |  | (25) | %
Restructuring charges | 5,616 |  |  | 9 | % |  | 1,574 |  |  | 2 | % |  | 4,042 |  |  | 257 | %
Total operating expenses | $ | 67,019 |  |  | 107 | % |  | $ | 80,061 |  |  | 111 | % |  | $ | (13,042) |  |  | (16) | %

In the six months ended September 30, 2025, sales and marketing expenses decreased $2.4 million, or 9%, as compared with the same period in fiscal 2025. This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.
In the six months ended September 30, 2025, general and administrative expenses decreased $10.5 million, or 30%, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.
In the six months ended September 30, 2025, research and development expenses decreased $4.2 million, or 25%, as compared with the same period in fiscal 2025. This decrease was the result of efficiencies realized through improved organization design, including the consolidation of common functions and increased weighting of resources in lower-cost regions.
In the six months ended September 30, 2025, restructuring expenses increased $4.0 million, or 257% as compared with the same period in fiscal 2025. The increase was the result of significant changes in management structure, and overall consolidation of resources designed to improve operational efficiencies and rationalize its cost structure. These actions are part of management’s ongoing efforts to align the Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units. The restructuring plan primarily involves workforce reductions and related severance and termination benefits.
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The Company expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of the fourth quarter of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.
Other Income (Expense), net

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Other income (expense), net | $ | (616) |  |  | (1) | % |  | $ | (1,375) |  |  | (2) | % |  | $ | 759 |  |  | 55 | %

The change in other income (expense), net during the six months ended September 30, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the three months ended September 30, 2025.
Interest Expense

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Interest expense | $ | (12,743) |  |  | (10) | % |  | $ | (9,921) |  |  | (7) | % |  | $ | (2,822) |  |  | 28 | %

In the six months ended September 30, 2025, interest expense increased $0.1 million, or 2%, as compared with the same period in fiscal 2025 due to a higher effective interest rate on our Term Loan.
Warrant Liabilities

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Change in fair value of warrant liabilities | $ | 1,525 |  |  | 1 | % |  | $ | 5,216 |  |  | 4 | % |  | $ | (3,691) |  |  | (71) | %

In the six months ended September 30, 2025, we recorded a non-cash gain of $1.5 million related to the change in fair value of our Forebearance Warrant liabilities. In the six months ended September 30, 2024, we recorded a non-cash gain of $5.2 million.
Loss on Debt Extinguishment

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of revenue |  | 2024 |  | % of revenue |  | $ Change |  | % Change
Loss on debt extinguishment | $ | (30,695) |  |  | (24) | % |  | $ | (3,003) |  |  | (2) | % |  | $ | (27,692) |  |  | 922 | %

In September 30, 2025, loss on debt extinguishment was related to the net of discount on issuance of term loans to a new lender and write-off of all unamortized debt issuance costs and fees. In September 30, 2024, loss on debt extinguishment was related to prepayment of our long-term debt.
Income Taxes

| Six Months Ended September 30, |  |  |  |
(dollars in thousands) | 2025 |  | % of pretax income |  | 2024 |  | % of pretax income |  | $ Change |  | % Change
Income tax provision | $ | 380 |  |  | — | % |  | $ | 605 |  |  | (3) | % |  | $ | (225) |  |  | (37) | %

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The income tax provision for the six months ended September 30, 2025 and 2024 is primarily influenced by foreign and state income taxes. Due to our history of net losses in the United States, the protracted period for utilizing tax attributes in certain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets. Accordingly, we have established a full valuation allowance against our U.S. and certain foreign net deferred tax assets. Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes various tax law changes effective beginning in 2025; while the Act had no material impact on the Company’s third-quarter 2025 results, the Company is evaluating its future effects.
LIQUIDITY AND CAPITAL RESOURCES
We consider liquidity in terms of the sufficiency of internal and external cash resources to fund our operating, investing and financing activities. Our principal sources of liquidity include cash from operating activities, and cash and cash equivalents on our balance sheet. We require significant cash resources to meet obligations to pay principal and interest on our outstanding debt, provide for our research and development activities, fund our working capital needs, and make capital expenditures. Our future liquidity requirements will depend on multiple factors, including our ability to raise additional capital, research and development plans and capital asset needs.
We had cash and cash equivalents of $14.7 million as of September 30, 2025, which consisted primarily of bank deposits and money market accounts. As of September 30, 2025, our total outstanding Term Loan debt was $106.1 million.
We generated negative cash flows from operations of approximately $32.5 million and $17.2 million for the six months ended September 30, 2025 and 2024, respectively, and generated net losses of approximately $63.7 million and $32.0 million for the six months ended September 30, 2025 and 2024, respectively. We have funded operations through the sale of Common Stock, Term Loan borrowings and PNC Credit Facility borrowings described in Note 4: Debt.
On January 25, 2025, the Company entered into the SEPA, in which pursuant to and subject to its terms, the Company has the right, but not the obligation, to sell up to $200 million of Common Stock at any time during the three-year period following the date of the SEPA. As of September 30, 2025, the Company has issued approximately 7.5 million shares of Common Stock under the SEPA for net proceeds of approximately $82.8 million, of which 6.3 million shares of Common Stock for net proceeds of approximately $66.9 million were issued in the six months ended September 30, 2025. No shares were issued in the three months ended September 30, 2025.
Our Term Loan has a maturity date of August 5, 2026. As discussed in Note 1: Description of Business and Summary of Significant Accounting Policies—Going Concern, we believe we will not be able to make the required repayment on that date using cash generated from operating activities. We entered into the Transaction Agreement that will convert Dialectic’s portion of the Term Loan into a Convertible Note with a three year maturity. We also agreed to use the proceeds from the SEPA to repay the OC III Lenders portion of the Term Loan. The issuance of the Convertible Note is subject to stockholder approval and there is no assurance that it will be approved. Also, we may not be able to access the SEPA to generate sufficient cash to repay OC III Lenders by the maturity date. We may be unable to obtain additional funding from other sources.
Cash Flows
The following table summarizes our condensed consolidated cash flows for the periods indicated.
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| Six Months Ended September 30, |
(in thousands) | 2025 |  | 2024 |
Cash provided by (used in): |  |  |  |
Operating activities | $ | (32,489) |  |  | $ | (17,194) |  |
Investing activities | (1,606) |  |  | (3,228) |  |
Financing activities | 32,791 |  |  | 11,525 |  |
Effect of exchange rate changes | 30 |  |  | (3) |  |
Net decrease in cash, cash equivalents and restricted cash | $ | (1,274) |  |  | $ | (8,900) |  |

Cash Used In Operating Activities
Net cash used in operating activities was $32.5 million for the six months ended September 30, 2025. This use of cash was primarily attributed to lower earnings.
Net cash used in operating activities was $17.2 million for the six months ended September 30, 2024. This use of cash was primarily attributed to lower earnings.
Cash Used in Investing Activities
Net cash used in investing activities was $1.6 million in the six months ended September 30, 2025, which was attributable to capital expenditures.
Net cash used in investing activities was $3.2 million in the six months ended September 30, 2024, which was attributable to capital expenditures.
Cash Provided by Financing Activities
Net cash provided by financing activities was $32.8 million for the six months ended September 30, 2025, which was related primarily to borrowings on our Term Loan.
Net cash provided by financing activities was $11.5 million for the six months ended September 30, 2024, which was related primarily to proceeds from shares issued under the SEPA.
Commitments and Contingencies
Our contingent liabilities consist primarily of certain financial guarantees, both express and implied, related to product liability and potential infringement of intellectual property. We have little history of costs associated with such indemnification requirements and contingent liabilities associated with product liability may be mitigated by our insurance coverage. In the normal course of business to facilitate transactions of our services and products, we indemnify certain parties with respect to certain matters, such as intellectual property infringement or other claims. We also have indemnification agreements with our current and former officers and directors. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of our indemnification claims, and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material impact on our operating results, financial position or cash flows.
We are also subject to ordinary course litigation. See Note 10: Commitments and Contingencies to the unaudited condensed consolidated financial statements for a discussion of our legal matters.
Off Balance Sheet Arrangements
Except for the indemnification commitments described under “Commitments and Contingencies” above, we do not currently have any other off-balance sheet arrangements and do not have any holdings in variable interest entities.
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Contractual Obligations
We have contractual obligations and commercial commitments, some of which, such as purchase obligations, are not recognized as liabilities in our condensed consolidated financial statements. There have not been any material changes to the contractual obligations disclosed in the Annual Report.
Critical Accounting Estimates and Policies
The preparation of our consolidated financial statements in accordance with generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report. On an ongoing basis, we evaluate estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We consider certain accounting policies to be critical to understanding our financial statements because the application of these policies requires significant judgment on the part of management, which could have a material impact on our financial statements if actual performance should differ from historical experience or if our assumptions were to change. Our accounting policies that include estimates that require management’s subjective or complex judgments about the effects of matters that are inherently uncertain are summarized in the Annual Report under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Policies.” For additional information on our significant accounting policies, see Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Recently Issued and Adopted Accounting Pronouncements
See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our quantitative and qualitative disclosures about market risk from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report, which such section is incorporated herein by reference.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our principal executive and principal financial officers have concluded that as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.
Notwithstanding the identified material weaknesses, management, including our chief executive officer and principal financial officer have determined, that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, for the periods presented in accordance with U.S. generally accepted accounting principles.
Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.
Management did not adequately design and implement effective control activities resulting in the identification of the following material weaknesses:
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Revenue Recognition
The Company did not maintain effective internal controls related to revenue recognition for the following:
•Controls related to the Company’s accounting practices and procedures for application of standalone selling price under Accounting Standards Codification Topic 606 Revenue from Contracts with Customers (“Topic 606”). Specifically, the Company did not have adequate controls in place to conclude on the application of standalone selling price consistent with the generally accepted application of the guidance in Topic 606.
•Controls over the accuracy of the inputs in the sales order entry process. Specifically, the Company did not sufficiently execute controls over the review of data inputs in the sales order entry process to ensure accuracy of the price, quantity, and related customer data.
•Controls for reviewing and updating deferral schedules, which drives the timing of service revenue recognition. Specifically, the start and end dates in the deferral schedules were not consistently aligned with the contractual service periods.
Manufacturing Inventory
The Company did not maintain effective internal controls related to manufacturing inventory. Specifically, controls to assess the accuracy of inventory held at third-party locations were not adequately executed.
Control Environment
Based on the material weaknesses identified in revenue recognition and manufacturing inventory, management concluded that the Company did not maintain effective entity-level controls within the control environment to prevent or detect material misstatements to the consolidated financial statements. Specifically, the Company (i) lacked sufficiently qualified staff or resources to perform control activities and (ii) conducted inadequate risk assessment and monitoring activities resulting in untimely or ineffective identification of internal control risks to support the design implementation and evaluation of the internal controls necessary to provide effective oversight over financial reporting.
Remediation Plan
The Company has implemented and is continuing to implement enhancements to address the identified material weaknesses. Actions include:
•Reviewing and updating relevant policies, procedures, and controls; this may include automation of certain controls within the ERP system where appropriate.
•Providing additional training to personnel responsible for executing and reviewing key controls.
•Enhancing efforts to assess risk and monitor the effectiveness of control design and operation over time.
•Engaging third-party specialists to assist the Company in assessing and establishing standalone selling price. While this has been completed, efforts are ongoing to increase automation in the calculation of standalone selling price.
•Engaging third-party specialists to help design and implement a control that reviews draft invoices above specified thresholds against customer purchase orders to assess the accuracy of the inputs in the sales order entry process prior to invoicing.
The Company is committed to maintaining a strong internal control environment and believes the remediation efforts will represent significant improvements in its controls over the control environment. These steps will take time to be fully implemented and confirmed to be effective and sustainable. Additional controls may also be required over time. While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weaknesses in internal control over financial reporting until a sufficient period has passed to allow management to test the design and operational effectiveness of the new and enhanced controls. Until the remediation steps set forth above are fully implemented and tested, the material weaknesses will continue to exist.
Changes in Internal Control
During the quarter ended September 30, 2025, Lewis Moorehead resigned as CFO effective August 18, 2025 and Laura Nash was appointed principal financial officer in his place. Except for the ongoing remediation measures to address the material weaknesses, in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Limitations on Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 10: Commitments and Contingencies to the unaudited condensed consolidated financial statements for a discussion of our legal matters.
ITEM 1A. RISK FACTORS
There have been no material changes to the previously disclosed risk factors discussed in “Part I, Item 1A, Risk Factors” in the Annual Report. You should consider carefully these factors, together with all of the other information in this Quarterly Report, including our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report, before making an investment decision.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the period covered by this Quarterly Report, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS
The exhibits required to be filed or furnished as part of this Quarterly Report are listed below. Notwithstanding any language to the contrary, exhibits 32.1 and 32.2 shall not be deemed to be filed as part of this Quarterly Report for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, except to the extent that the Company specifically incorporates it by reference.

|  |  |  | Incorporated by Reference |  |
Exhibit Number |  | Exhibit Description |  | Form |  |  | Filing Date |  | Exhibit |  | Filed or Furnished Herewith
3.1 |  | Amended and Restated Certificate of Incorporation of the Company, as amended through August 26, 2024 |  | S-1 |  |  | 1/27/25 |  | 3.1 |  |
3.2 |  | Amended and Restated Bylaws, as amended through June 12, 2025 |  | 8-K |  |  | 6/18/25 |  | 3.1 |  |
4.1 |  | Warrant to Purchase Common Stock dated September 23, 2025 issued to Dialectic Technology SPV LLC |  | 8-K |  |  | 9/23/25 |  | 4.1 |  |
4.2 |  | Registration Rights Agreement dated September 23, 2025 by and between the Company and Dialectic Technology SPV LLC |  | 8-K |  |  | 9/23/25 |  | 4.2 |  |
10.1# |  | Offer Letter dated August 27, 2025 by and between the Company and James C. Clancy |  | 8-K |  |  | 8/28/25 |  | 10.1 |  |
10.2# |  | Offer Letter dated August 27, 2025 by and between the Company and Tony J. Blevins |  | 8-K |  |  | 8/28/25 |  | 10.2 |  |
10.3* |  | Transaction Agreement dated September 23, 2025 by and among the Company, Dialectic Technology SPV LLC, OC III LVS XXXIII LP., and OC III LVS XL LP |  | 8-K |  |  | 9/23/25 |  | 10.1 |  |
10.4* |  | Fifteenth Amendment to Term Loan Credit and Security Agreement dated September 23, 2025 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Alter Domus (US) LLC, as disbursing agent and collateral agent |  | 8-K |  |  | 9/23/25 |  | 10.2 |  |
10.5# |  | Settlement A greement dated July 16, 202 5 by and between Quantum S torage UK Ltd and H.J.W. Spanjaard |  |  |  |  |  |  |  |  | X
10.6# |  | Separation Agreement and General Release of Claims dated August 20, 2025, by and between the Company and Lewis W. Moorehead |  |  |  |  |  |  |  |  | X
31.1 |  | Certification of the Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  |  | X
31.2 |  | Certification of the Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  |  | X
32.1^ |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  |  | X
32.2^ |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  |  | X
101.SCH |  | XBRL Taxonomy Extension Schema Document |  |  |  |  |  |  |  |  | X
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |  |  |  |  | X
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |  |  |  |  | X
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |  |  |  |  | X
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |  |  |  |  | X
104 |  | Cover page interactive data file, submitted using inline XBRL (contained in Exhibit 101) |  |  |  |  |  |  |  |  | X

* Schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules and attachments upon request by the Securities and Exchange Commission.
# Indicates management contract or compensatory plan or arrangement.
^ This exhibit is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after date hereof and irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | Quantum Corporation |
|  |  | (Registrant) |
| November 13, 2025 |  | /s/ Hugues Meyrath
| (Date) |  | Hugues Meyrath
|  |  | President and Chief Executive Officer
|  |  | (Principal Executive Officer)
| November 13, 2025 |  | /s/ Laura A. Nash |
| (Date) |  | Laura A. Nash |
|  |  | Chief Accounting Officer |
|  |  | (Principal Financial Officer and Principal Accounting Officer)

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